An effort to modernize Orange County, Calif.'s tax collection system that was supposed to take three years and cost $8 million was on track to cost twice that amount and take twice as long when officials pulled the plug.

Instead of seeing the project through to completion, Orange County abandoned the effort, declared the software "fatally flawed" and in April filed a lawsuit against the contractor.

The two sides -- the county and the contractors, Tata Consultancy Services and its U.S.-based subsidiary -- are now attempting to reach a mediated agreement, according to the most recent federal court filing.

In 2007, Orange County hired Tata America International, a subsidiary of the world's largest offshore provider of outsourced IT services -- Mumbai, India-based TCS -- to develop custom software to handle most of the county's tax functions. The county collects some $4.5 billion in taxes each year.

Before hiring Tata, the county had used another contractor to develop the business documentation for the project. That documentation ran more than 6,000 pages and outlined every aspect, from legal requirements to operating systems.

Tata was the winning bidder for the job, offering to do it for just over $8 million. As part of the contract, TCS proposed that all work on the tax project "be performed onsite at the county offices in Orange County."

Instead, the county states in its legal filings, many of the people that TCS assigned to the project "worked and lived in India" -- a logistical complication that contributed to delays and communication problems.

The county says it will have to start over from scratch.

In a statement, a TCS spokesman said it's company policy not to discuss pending legal matters, but added that TCS stands by the quality of its work. "Over 98% of our business comes from repeat clients," the spokesman said.

This version of this story was originally published in Computerworld's print edition. It was adapted from an article that appeared earlier on Computerworld.com.